Who’s to blame for $4 gas

The next time you are at a hosed-robber – I mean the gas pump – do a gut check. The Energy Information Administration has the numbers that will make you sick long before the fumes will.

Who’s to blame for $4 gas

Prices have surged over the past four years – and there’s a bunch of reasons why.

By Steve Hargreaves, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) — It’s hard to imagine now, but in 1999 gasoline sold for 90 cents a gallon. How’d we get from there to $4 a gallon?

There is no short answer – many things happened, and together they formed a chain of events from cheap gas to $100 tankfuls.

2004: Demand pressure

One of the most common reasons cited for the price jump is supply and demand – we are using more oil, which accounts for 70% of the price of gas, and finding less of it.

Why we are finding less oil and using more of it is partly a result of the low prices during the 1990s. Those low prices – partly caused by low gas taxes in the U.S. compared to other developed nations – both encouraged rapid consumption domestically (think SUVs) and underinvestment in new production by the world’s oil companies.

By the time 2004 rolled around – and developing economies around the globe roared to life – the world was left in a pinch.

“Our demand has skyrocketed, but our ability to supply that demand has stagnated,” said Stephen Schork, publisher of the industry newsletter The Schork Report. Gasoline prices topped $2 a gallon for the first time ever in May of 2004, “and we’ve been off to the races since then,” said Schork.

As demand grew and the supply of oil remained relatively flat, the difference between the amount of oil the world could produce and the amount it consumed narrowed. That meant a supply disruption from one place in the world could not be easily covered with spare oil from another part.

2005: The storm

This was illustrated in September 2005, when Hurricane Katrina knocked out a significant chunk of U.S. refining and gasoline prices spiked above $3 a gallon for the first time ever.

“It exposed how little surplus refining capacity we have in the U.S.,” said James Crandell, an energy analyst at Lehman Brothers.

A new refinery hasn’t been built in the United States in three decades, although capacity at existing refineries has been expanded.

2006: Hot tempers

The lack of spare supply has kept other geopolitical events in the forefront for the last few years. Iran and the spat over its nuclear program dominated the news in early 2006, and combined with Israel’s invasion of Lebanon in the summer of that year to cause another spike in gas prices to over $3 a gallon.

Geopolitical events need not be shooting wars to attract attention. Analysts say general resource nationalism since 2004 is partly responsible for high oil prices.

In the past few years, Iran’s Mahmoud Ahmadinejad, Russia’s Vladimir Putin and Venezuela’s Hugo Chavez have all become more bellicose on the world stage – in some cases, seeking a bigger share of the profit from foreign oil firms or threatening to cut off oil supplies if attacked.

Some say the Bush administration’s provocation of Iran and Venezuela, coupled with a botched occupation of oil-exporting Iraq, has contributed to the geopolitical tension. But defenders say that, in the long run, the administration’s actions will eventually lead to a more democratic – and thus stable – global supply.

2007: Tight supplies

New supplies of oil from non-OPEC countries were supposed to come online in 2007 and ease some of these supply bottlenecks. But problems in Kazakhstan and Russia – as well as sweeping drilling bans in the United States – mean global consumption is growing twice as fast as non-OPEC production.

Analysts say OPEC, which hold two-thirds of the world’s oil reserves but sees a global economy humming along despite $130 oil, has little incentive to increase production.

2008: Speculators swarm

Strong demand, tight supplies and a volatile marketplace have attracted the interest of investors – the last main contributor to high prices.

“The speculator has seized upon this opportunity,” said Schork. “They have recognized there is something fundamentally flawed in this market.”

Since 2003, the number of oil contracts exchanged on the NYMEX has more than doubled, said Schork.

Money flowing into oil – and commodities in general – has been especially sharp over the last 6 months as investors look for good returns amid falling stock prices and an inflation hedge against a falling dollar.

That’s helped push oil prices to nearly $130 a barrel and gasoline to an average of nearly $3.80 a gallon – smashing previous records even when adjusting for inflation.

Why do you think gas prices are so high? Post a comment.

Whether this investor influx into the oil market is justified is matter of debate. Some see high oil prices as necessary to boost supply and limit demand.

“You can’t just point the finger at speculators,” Michael Haigh, head of U.S. commodities research at the investment bank Société Générale, recently told CNNMoney.com “Fundamentally, the markets are where they are supposed to be.”

Others are less certain.

“The fundamental picture to us doesn’t justify the price,” said Lehman’s Crandell. “It’s kind of suggestive of a bubble.”

Are you feeling the pinch of high gas prices? Tell us how gas prices are affecting you and what you’re doing to cope. Send us your photos and videos, or email us to share your story.

Texas Reds Steak and Grape Festival 2009

It’s that time of year again. Now that kids are out of school and people are looking for things to do with the family it’s time to drink wine and eat steak.

This year it is the third annual Texas Reds Steak & Grape Festival. The main events happen June 20.

Last year’s events were good by Bryan standards. It was hot, humid and not much more to do than sample wine and eat meat.

Signed In Blood

So during an office discussion one thing led to another, and I threw out the thought that one day we will all have our DNA signature in the “National DNA database” and then what happens when that gets “hacked”. That would give a new meaning to “signed in blood”.

The FBI and the Virginia State Police continue to investigate a security breach involving the prescription monitoring program maintained by the Department of Health Professions, which licenses health care providers in the state. State officials said a hacker penetrated the program’s Web site, accessed millions of prescription records and reportedly posted a note demanding $10 million for the data’s return. Source: Hacker investigation like “looking for a needle in a haystack” | Roanoke Times

Math Buffs Awed By Odd Day

Here’s one for the odd file.

For the mathematically challenged, Thursday’s date, 5/7/09, is one of only six this century that will feature three consecutive odd numbers. Source: Math Buffs Awed By Odd Day | San Francisco Chronicle

What’s New With Swine Flu (H1N1 2009)

A couple buzzwords have surfaced as a result of the H1N1 (swine) flu.

Social distancing” and “pandemic” are the latest additions to the vernacular. Avoiding crowds of people where the risk of infection is the highest is the social distance thought to reduce the spread of swine flu. It’s an airborne virus and is thought to spread quickly among people in close contact. If we avoid contact we avoid infection.

The word pandemic has been around for as long as there as been people on every continent getting sick. But, with this year’s swine flu outbreak – thought to originate in Mexico – it has been tossed around the media like a catch phrase. Yes, swine flu is pandemic simply because it has spread around the world in a few weeks.

What’s interesting is if you read my other story today is that technology – specifically the Internet – is being used to fight the disease. Twitter is buzzing with swine flu tweets. But like everything important, people should look before they leap.

Public health experts say the Internet can be an important source of information on the H1N1 virus, but you need to know who’s at the helm. “In the current swine flu situation, some [sources] are alarmist, where others present a more balanced picture of concern,” says Dr. Robert Kim-Farley, director of communicable disease control and prevention for the Los Angeles County Department of Health Services and a professor of epidemiology at the UCLA School of Public Health.

On the other hand, knowledgeable, trusted sources, like the CDC, are on the Internet too and they are trying to spread the word faster than the disinformation sources and rumor mills.

Lest we forget pig farmers are non too happy with calling it swine flu. Pork belly futures are down; sales are lower. So, officials are using the scientific name Influenza A H1N1.

From military project to the masses how the Internet was born

“This year marks the 40th anniversary of the technologies that led to the creation of the Internet and revolutionized the way we work, talk and play.”

This is certainly true, and for once my timing was spot on. I wasn’t born when the Internet (capital “I”) was created. Now, I work in an industry that is a product of the Internet – the World Wide Web – which also did not exist until I was about to enter the work force.

What does it all mean? It means – judging by the size and speed at which the Internet is growing – that there should be work for me for a long time; total, global economic collapse not with standing.

With Internet and the WWW we certainly can find more information (or disinformation) today than 40 years ago. Children are smarter for it. Adults profit from it. And, a large portion of human interaction – like this blog – is a result of it.